I sold BTC on ebay for a little bit and made some money, but I did get scammed a few times.

I agree with most of what you said, but I have to disagree with using Paypal altogether. The best, most secure way to sell BTC on eBay is through the Virtual Currency category (will make you kosher on eBay terms), but you need to setup a bank transfer instead of using PP.

I spoke with the PP claims department yesterday regarding an immediate refund of $150 to one of my buyers. He informed me that it doesn't matter what form you attempt to sell BTC in (paper wallets, pennies, even wallets on USB sticks), they will not protect you. The reason for this is that the buyer can simply claim they did not receive what was promised (an empty wallet or envelope), even with shipping confirmation. Do you really want to rely on Paypal judgement at that point? At least with bank transfers, you're not running the risk of some pillock thieving your coins with a few simple lies.

Of course, this essentially makes you no better than any other pain in the ass method of getting BTC out there, but at least you're protected this way. The only risk I can think of is dealing with a stolen bank account. Even then, the chances of getting burned are still far less than dealing with PP...and even less if you deal in smaller amounts.

Looks like eBay is finally deciding to unclench it's cheeks a little. Hopefully PP will do the same...and be smart about it, which is asking a lot. Seems like BTC is following the inevitable conclusion of being required to have a physical form. Dunno if it'll ever be fully trusted if it doesn't.